1. Field
Embodiments of the present invention relate to a method, a system, and a computer program for predicting an impact of a tax event on a user's tax liabilities at any intermediate time during a current tax year based on a comparison of known user information, predicted user information, tax event information, and tax deductions, credits, and eligibility rules for a particular deduction. More particularly, embodiments of the present invention predict the impact on the user's tax liability of tax events that include income reported on a 1099 form.
2. Related Art
Tax preparation software is currently available for use in determining a user's tax liability for the previous year by asking the user questions regarding their gross annual income, purchases, taxes paid throughout the year, and other financial actions taken by the user. Although the user may guess their total deductions and tax liability for the current tax year based on the previous year's tax return, such a method is unreliable due to possible changes in the user's income, changes in the user's purchases, changes in the user's life events, or changes in tax laws compared with the previous tax year. Accordingly, there is a need for a method, a system, and a computer program that assists the user with computing and predicting, at an intermediate time in the current tax year, the tax impact of a tax event, such as income reported on a 1099 form, purchases, or other actions.
In addition to the problems stemming from knowing the tax impact of the tax event at an intermediate time in the current tax year, there is no method, system, or computer program for assisting the user in determining the impact of the tax event, such as income reported on a 1099 form or purchases. Accordingly, there is a need for a method, system, and computer program for assisting a user in determining how a particular tax event may affect their tax bill for the current year prior to or in conjunction with income reported on a 1099 form.
Furthermore, as users go about their daily activities, users are generally not aware of tax events they could make or actions they could take to decrease tax liabilities or otherwise maximize tax benefits available to them. For example, a combination of factors may need to be considered to determine if a user is eligible for a particular deduction or credit, such as a user's occupation, income, age, number of dependents, location, and medical expenses. It is possible that a user may be aware of a few tax deductions available to them, but the user is seldom aware of all the combinations of factors that could affect their deduction eligibility. Thus, users may unknowingly miss opportunities to make purchases or take actions that could reduce their tax liability. In turn, users may also unknowingly take actions that could increase their tax liability. Accordingly, there is a need for a method, system, and computer program that will educate a user on potential tax benefits or potential tax consequences of tax events based on known information about the user.